Rated Funds: the winners and losers in 2017

Tom Bailey takes a look at the leaders and laggards among Money Observer’s Rated

Among Money Observer’s Rated Funds, those with a focus on Asia were the star performers of 2017. Of the top 10 performing Rated Funds this year, half were focused on east Asian markets – mainly China and Japan.

The overall winner, though, was TR European Growth trust, up 53.8 per cent. The trust invests primarily in small and medium-sized companies. It has benefitted from political risks receding on the continent, while at the same time economic growth has rebounded sharply. 

The second best performing Rated Fund was Baillie Gifford Shin Nippon, which saw a yearly return of 49.8 per cent, while Baillie Gifford Japan IT also saw a strong return of 45 per cent. 

Japan has increasingly become a favourite of investors in 2017, due to strong economic performance, confidence in prime minister Shinzo Abe’s reform agenda and major changes to Japanese corporate governance. 

It has also been an important year for China. Despite concerns about a credit bubble and overheating housing market, the world’s second largest economy has seen strong performance. Although risks remain, China’s has managed to maintain both stability and continued growth.  

As a result, funds such as Janus Henderson China Opportunities and Fidelity China Special Situations have been able to see strong returns, of 39.3 per cent and 34.5 per cent, respectively. 

Baring Eastern Trust – which focuses on the East Asian region, with its largest holdings being in China, Taiwan and South Korea – also performed well, returning investors 39.32 per cent.

Elsewhere, at a time when macroeconomic concerns are gripping the UK, perhaps surprisingly, Old Mutual UK Smaller Companies was also one of our Rated Fund’s top performers, bringing in a return of 44.6 per cent.

The trust’s strong performance has largely been attributed to stock picking skill of manager Dan Nickols. 

Best performing Rated Funds over 2017 to 15/12
Fund name Return (%)
TR European Growth Trust 53.82
Baillie
Gifford Shin Nippon
49.78
Syncona 49.05
Baillie Gifford Japan Trust 45
Old Mutual UK Smaller Companies 44.62
Baring Eastern Trust 39.32
Janus Henderson China Opportunities 39.26
Scottish Mortgage Investment Trust 37.3

Standard Life UK Smaller Companies Trust
36.01
Fidelity China Special Situations 35.46

Among many of the worst performers of our Rated Funds have been bond focused trusts. M&G Global Macro Bond saw a negative return of -4.39, while Schroder ISF Global Inflation Linked Bond saw returns of just 1.89 per cent.

This is perhaps expected, as governments and central banks around the world have started, or continued, in 2017 to tighten monetary policy. 

Worst performing Rated Funds over 2017 to 15/12
Fund name Return (%)
Newton
Real Return Inst
2.26
JOHCM UK Opportunities 2.09
Fidelity Moneybuilder
Balanced
1.96
Schroder ISF Global Inflation
Linked Bond
1.89
Standard Life Investments
Emerging Market Debt
0.79
Hermes US SMID Equity 0.58
Fidelity American Special
Situations
-1.4
Schroder ISF Global High
Yield
-1.52
M&G Global Macro Bond -4.39
Investec Global Gold -7.11

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